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self is never statistically significant in the Average Revision Delay regressions. As a result, we conclude that overall for our sample of S&P 500 firms, the data provide some evidence that analysts respond more strongly and more quickly, in terms of revising their earnings estimates, to guidance when it is issued by a family firm, consistent with H2.

When investor response to guidance is considered, we again find evidence of a stronger response when the forecast is offered by a family firm. In particular, Table 4, which contains event-study (3-Day CAR) regressions for guidance, shows that the interaction term between the Family Firm Indicator variable and Forecast Surprise is always significant and positive; and that the Family Firm Indicator variable itself is generally positive and highly significant (the exception is the point forecast subsample for which it is statistically indistinguishable from zero). While overall these results provide strong indications that guidance offered by family firms is more informative to investors, the fact that the Family Firm Indicator variable is not statistically significant in the point forecast subsample regression is interesting—especially when considered with the fact that many of the control variables that are significant in the other two regressions are not in that same regression.[30] These observations suggest that when guidance is offered in its most specific form (a point estimate), many, but not all, of the differences between the issuing firms lose their influence on the investor response to the news in the guidance. They also suggest that range forecasts issued by a family firm are particularly useful to investors, consistent with their tendency to be more specific than range forecasts issued by non-family firms. Overall, we conclude that the evidence in Table 4 provides strong evidence that the market perceives greater value in earnings forecasts offered by the management of an S&P 500 firm before the fiscal period end, when they come from a family firm.[31]

Before concluding, we want to compare our findings with those of other researchers who examine the management forecasts of family firms. Ali et al. (2007), using a sample of S&P 500 firms as we do, find that family firms are more likely to issue a forecast of the current quarter's earnings if the firm experiences a decline in earnings in that quarter (that is, if the change in earnings from that of the same quarter in the previous fiscal year is negative). Our findings complement and extend theirs by showing that not only are S&P 500 family firms more frequent forecasters, they also offer higher quality forecasts, especially when those forecasts contain bad or neutral news and are offered as quarterly guidance. We further extend Ali et al.'s analysis by showing that quarterly guidance elicits a stronger response from analysts and investors when it is offered by a family firm. Thus, our findings suggest that S&P 500 family firms provide more specific earnings forecasts, especially when providing guidance, as a means of reducing the potentially more severe agency costs inherent in family firms—or as a means of meeting the demand for more transparent, useful financial disclosures by non-family shareholders.

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